Google Misses Revenue, But Increases Capex

• Cloud revenue growth slows, misses analyst expectations

• Alphabet's $75 billion AI investment above Wall Street expectations

Google’s Parent Alphabet reported mixed quarterly and full-year 2025 earnings.

The tech giant’s Q4 revenue came at $96.5B, just missing Wall Street’s expectations of $96.7B by a whisker.

Here is the segment breakdown:

• YouTube’s ad revenue grew $10.5B or 13.8% year-over-year.

• Cloud revenue for was $12B, up 30% vs the same period last year

• Search business brought in $54B, up 12.5%.

• Advertising revenue was $72.4B, a 10.6% increase year over year.

Market participants looked worried that cloud revenue missed the target, despite the 30% jump year-over-year driven by growth in generative AI.

The stock sank 8% after hours as investors began showing signs that increased competition could further eat into the Google ad business.

The major surprise here was the bump in capital expenditure (capex) to $75B in 2025 sharply higher than the analyst expectations of $57.9 billion, announced by Alphabet CEO Sundar Pichai.

source: Finchat

The expenditures will be in “technical infrastructure, primarily for servers, followed by data centers and networking,” according to finance chief Anat Ashkenazi.

This follows Meta's and Microsoft’s jumps in CAPEX to $65B and $80B, respectively as the AI race switches to higher gear!

Combined capex spending for Amazon, Microsoft, Meta and Google jumped nearly 8 times over the last 8 years and is expected to hit $314B this year.

Big tech are rushing to build out their data centres that will create the next-generation AI infrastructure, using Nvidia’s latest and greatest graphics processing units, or GPUs.

Alphabet also expects headcount growth in 2025 to facilitate “key investment areas such as AI and cloud.”

Investors can long Google using our 2x Alphabet, 3x Alphabet.

Alternatively, traders can short Google using our -1x Alphabet, -3x Alphabet.